tv Nightly Business Report PBS January 10, 2012 6:30pm-7:00pm EST
improving, are investors better off in stocks now or bonds? >> we think the treasury market by the end of the year will sell off just a little bit. with that, we think the 10-year treasury yield will end the year at 2.25%. >> reporter: i'm diane eastabrook at the north american international auto show in detroit. today was japan's turn in the spotlight. i'll tell you how companies from
that country are fighting back after a year of natural disasters and lost sales. >> susie: it's "nightly business report" for tuesday, january 10. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: captioning sponsored by wpbt >> susie: good evening everyone. tom hudson is off tonight. stocks were in rally mode today on high hopes for a positive earnings season. here at the big board, the dow gained 70 points. the nasdaq surged 26 points. the s&p added 11. that's the fifth up day for the index in the last six. the recent move higher in the stock market has some investors questioning their love for bonds, in particular u.s. treasuries. even though the first big bond auction of the year met with strong demand today, there are concerns bond investors may not fare as well in 2012.
suzanne pratt reports. >> reporter: the outlook for treasuries this year is something of a mixed bag, but that hasn't stopped people from coming to investment offices like this one to pour millions of dollars into bonds. it's no wonder investors are still enamored of bonds. last year, treasuries returned about 10%, beating corporates and stocks. after all, u.s. government bonds have long been regarded as a safe haven. for that reason, some experts predict treasuries will be a good bet this year, and with europe still in turmoil, there are even fewer risk-free investments. >> you no longer have a lot of european peripherals, and even some of the european core countries are no longer considered safe. all of that in an environment where more and more people are buying bonds, so that's very supportive of the treasury market overall. >> reporter: but, concerns in the market are growing about a stronger u.s. economy. with that often comes inflation, an enemy of bonds. still, at least so far, the good economic news has yielded a big
ho-hum. >> what is interesting is that the treasury market for the most part isn't really moving with the economic data. it's really more the macro story and, in particular, the situation in europe. as for where yields will go this year, experts are all over the charts. credit suisse's jersey predicts the 10-year won't be much higher than it is today. >> reporter: by year end, you will more or less make the coupon, you'll make the yield of say 2 percent, if that's, let's say, what the fund is yielding today. it's not a stellar outcome, but with think as part of a balance portfolio, it makes a lot of sense. on the other hand, goldman's >> reporter: beinner says the yield on 10-year could fall as low as 1.5%. and, because bond prices move in the opposite direction, that could give bond investors a nice rally. >> if we get into a deflationary situation that's emanating out of europe, probably not emanating from the u.s. initially, that could happen, at least in the short term.
likely unless something material has changed at that point, that might be a good selling opportunity. >> reporter: one other factor for bond investors to keep in mind is what the federal reserve plans to do with interest rates this year, and that's absolutely nothing-- more good news for bonds. suzanne pratt, "nightly business report," new york. >> susie: our guest tonight is buying more stocks than bonds in his client portfolios. he's art hogan, managing director and strategist at lazard capital markets. here's the lazard asset allocation. 75% stocks and 25% bonds. that's up from last year's 60/40 mix. hi art, nice to have you, happy new year. >> susie thank you very much, happy new year to you too. >> susie: thank you very much. tell us why you believe it's time to boost over bond holdings. >> when you look at that, remember that is a long term investor outlook and it's not
for someone who is going to need this money in the next three to five years. but remember what's happened over the last couple year in both the treasury market and the corporate bond market. we've had a flight to safety. what happens there is your yield below 2%, a lot of people thinking it hovers around 2% through 20 126789 that's the kind of return that's not going to keep up with the pace of inflammation for one thing and another thing it's not -- inflation so we want to pair back on what's perceived as a bond bubble and get more he can tease which is still after a year a great deal of volatility ended the year flat. remember there is about 60% that actually papers the dividend yield that's higher than the 10 year treasury in the u.s. that's the two dynamics you want to think b this is long term investors. if you're close to termination you don't want to sell your bonds and get into equities. >> susie: what are you looking at, u.s. stocks mostly
over international? what's the mix there. >> we're thinking the growth dynamic in the global economy next year is going to favor the u.s. certainly the u.s. companies that have a majority of their sales into the u.s. or into emerging markets which you want to avoid is u.s. equities that do in the 40% or more in the even markets being in the euro surface. we see a recession for most of 12 for the euro zone. if you got exposure to some of the emerging markets continuing to grow you will do well. look for dividend yields. there's still a lot of yields out there in the marketplace and look for those companies that are actually category killers the folks doing extremely well and out pacing. >> susie: can you give an example of the kind of stocks you're thinking of in terms of dividends or these other factors. >> if you look at other factors for example, consumer, we heard a lot from the consumer over the back to school and holiday shopping season, we have consumer numbers out. one of companies doing very well is the limited.
victoria secrets and bet bed, -- bath and body works. it's a company in large part does well and has continued to do well. and it's dependent on a consumer that continues to be in the mainstream here. also look at a company like tjmaxx. there's one missed comp in 40 quarters in row. another company does well in a good economy or bad economy. two of the companies is consumer discretionary. >> susie: let me jump in. we have less than 20 seconds. what about in terms of bonds. they still want to park their money into fixed income. treerkztreasuries, corporate or. >> you don't have to make the selection, it puts you out your scale will be higher and let someone else do your homework. it will be 2% tend of the year and you want to be further out
on corporate scale. >> susie: no disclosure on those stock recommendations. >> there is not, thank you. >> susie: thank you art for coming on the program. appreciate you. >> thank you susie. >> susie: we were speaking with art hogan of lazard capital markets. >> reporter: i'm diane eastabrook at the north american international auto show in detroit. still ahead, japanese auto companies are fighting back after a year of natural disasters and a strong yen. >> susie: the polls in new hampshire are about to close, marking the end of the first-in- the-nation presidential primary. former massachusetts governor mitt romney headed into today's vote the favorite, but faced a barrage of attacks from opponents over his business record. after new hampshire, the g.o.p. primary shifts to south carolina-- a contest that could determine the republican nominee. south carolina has traditionally been a state where social and religious conservatives do well. but this year, as darren gersh reports, the shift from the new hampshire to south carolina primaries is crossing a large economic divide.
>> reporter: as the candidates shake the last hands in new hampshire, the presidential contest is already in full swing in south carolina, a state that is almost economically the opposite of chilly new hampshire. the biggest difference between new hampshire and south carolina comes down to two numbers: 5.3% and 9.9%. new hampshire's unemployment rate is 5.3%, one of the lowest in the nation. in south carolina, the figure is almost twice as high. new hampshire voters are also much better off, enjoying a median income of almost $66,000, compared to south carolina's median income of less than $42,000. but the trend in south carolina is improving. researchers at the university of south carolina expect employment in the state will grow by 2% this year, although they still call the economy in the palmetto state "very delicate." there is, however, one number where new hampshire and south carolina are fairly close, andss who say jobs and the economy are
the top issues facing the nation. in new hampshire, the figure is 63%. in south carolina, 56% say the economy and jobs are the nation's biggest problems. darren gersh, "nightly business report," washington. >> susie: just when we've gotten used to typing names like "dot com," "dot net" and "dot org," a digital curveball may be coming our way. the organization that governs the internet will start accepting applications on thursday for a batch of new domain names, like "dot shop" or "dot music." as sylvia hall reports, the change spells opportunity for some businesses but also poses new challenges for businesses trying to protect their brands. >> reporter: we think of the internet as a world of endless possibilities, tailed by a uniform "dot com." or "dot org." or dot net. right now, web addresses can end only 22 ways. icann, the organization that issues digital domains, will start accepting applications for more on thursday i ta vemohat
could add hundreds, or even thousands, of new top domains to the internet. >> this heralds a new era in the domain name system, and a significant new milestone in the history of the internet. this will be the largest opening of top-level domains-- those are names to the right of the dot-- in the history of the internet. >> reporter: that means web addresses will open up to new languages and new characters. companies and interest groups can also buy their own names. critics worry the application process will open an expensive name-grab where companies and non-profits empty their pockets to protect their brands. >> a lot of companies have said that they feel that they may have to buy their own name back, basically. >> reporter: the association of national advertisers has joined the chorus of those opposed, requesting that icann safeguard trademarks. >> we have come forward with a proposal to icann saying that you should set up a registry-- a do-not sell registry-- and that for brand-holders who do not want to use their brands in a top-level domain, that for no
cost, they should be able to put their name on that registry. >> reporter: jaffe's still waiting to hear back on those proposals. but the names aren't cheap, and some say the cost alone will prevent cybersquatters from grabbing choice domains. it costs one $185,000 just to apply. companies who win domains will have to pay $25,000 annually in fees. karen bernstein is helping a client apply for one of the registries. >> it's 185 thousand dollars to apply, so the chances that someone is going to take, say, "dot coke" and pretend that they are coca cola are going to be very limited. >> reporter: bernstein says the new domains could also open a new chapter for trademarks. until now, the letters on the right side of a web address have not been subject to trademark laws. she thinks that could soon change. sylvia hall, "nightly business report," washington. >> susie: here at the n.y.s.e., a lot of buzz about the future of the big board. the planned merger between the new york stock exchange and
germany's deutsche boerse may be in jeopardy. regulators in europe reportedly plan to reject the $17 billion deal due to concerns about a monopoly in derivatives trading. but shares of n.y.s.e. euronext climbed, as did most other stocks. let's take a closer look in tonight's "market focus." bank of america was the biggest gainer in the dow today. its shares surged almost 6%. its rivals also rose. morgan stanley, goldman sachs, citigroup and j.p. morgan all gained between 2% and 4%. financials got a lift after fitch ratings suggested europe is making progress in solving its debt problems. david riley, the head of fitch's sovereign group, said "the unwinding of the imbalances that led to the crisis is well underway... and the headwinds should begin to ease toward the end of the year." there were also big moves in several retail stocks today.
shares of liz claiborne tumbled 13%. the company issued a disappointing financial outlook due to falling sales and the resignation of its chief financial officer. but a different story for lululemon, where shares rose 12%. the exercise apparel company raised its fourth-quarter earnings guidance thanks to strong sales. although the stock has been on a bit of a roller coaster ride, it is up more than 60% in the past year. now take a look at the chart of another upscale retailer, tiffany. its stock fell 10.5% and is trading near year-ago levels. tiffany lowered its full-year earnings outlook on weak holiday sales. the company said jewelry spending was more cautious in the u.s. and europe. several technology firms also issued earnings guidance today. cirrus logic boosted its third- quarter revenue outlook. the firm says demand remains strong following the holiday season, and that pushed the shares up almost 16% to $19.64,
but philips electronics lowered its fourth-quarter earnings forecast. the world's top lighting maker is reporting weak sales in european markets. shares fell $1 to $19-- a decline of 5%. but that drop is mild compared to the 28% decline in webmd. thinternet provider of medical information scrapped plans for a sale of the firm and its c.e.o. resigned. webmd was one of the day's biggest losers. and that's tonight's "market focus."
>> susie: honda, toyota, and nissan are riding a comeback wave, rebounding from last year's natural disasters in asia. today at the north american international auto show in detroit, they rolled out more fuel efficient models and updates of old favorites. but as diane eastabrook reports, there's another problem that could plague sales in the u.s. >> reporter: honda kicked off the new year today with a new accord concept at the north american international auto show. a redo of the company's best- selling model will have a more fuel-efficient engine and come in an electric plug-in. it's a safe play for the japanese auto company, following a year of natural disasters back home that crippled production and threw a wrench into u.s. sales. >> we're here to serve notice to the competition that honda is
again firing on all cylinders. we're back to full power and we're again racing with a vengeance. >> reporter: disasters aside, honda could use a hit. home runs used to come easy for the industry darling, but models like the well-worn civic have barely been hits, while u.s. rivals like g.m. are scoring with products like the chevy cruze. honda is hardly alone in its woes. last year, the japanese auto industry as a whole saw its market share shrink in the u.s., while every other region made gains here. most of the japanese companies are keeping their fingers crossed that mother nature won't throw any more curve balls this year. still, they face another problem that could be even more vexing: a strong yen. i.h.s. global insight auto analyst rebecca lindland says exporting product to a country with a cheaper currency is a huge financial headache. >> it can really devalue their balance sheet, because everything they sell here without producing, they then translate it back into yen and
that's where they take the hit back on their balance sheet. >> reporter: nissan is hoping to snag more sales with its redesigned pathfinder, made in tennessee. chairman and c.e.o. carlos ghosn says, by the end of this year, the company plans to increase the amount of product it builds here from 75% to 85%. >> i think this is a lesson all car manufacturers based in japan have learned is the best way to protect yourself against foreign exchange fluctuation is to go for origination. you know, if you want sell cars in china, you build them in china. if you sell cars in india, you build them in india. if you sell cars in the united states, you build them in the united states. still, design and technology are as important to u.s. consumers as price. today toyota unveiled the ns4 concept-- a flashy plug-in hybrid that could extend the company's popular hybrid prius line. in march, toyota will start selling the prius c, a compact that will start at just under $20,000. the company's senior vice president of u.s. auto
operations says toyota's legacy in hybrid technology continues to help it win sales, despite increased competition. >> we still have 70% of all hybrids sold last year with toyota, so we welcome the competition. for us, i think the good news is that hybrid technology is a proven technology that everyone else is adapting. >> reporter: industry watchers also point out that products like the toyota camry and honda accord continue to be top sellers in the u.s., so, while the japanese may be down for now, don't count them out. diane eastabrook, "nightly business report," detroit. >> susie: here's what we're watching for tomorrow: we'll get an update on the thtion's regional economies as e federal reserve issues its beige book, and we'll see earnings from homebuilder lennar. also tomorrow, michael farr is our "street critique" guest. you can email your questions to email@example.com.
o.j. prices soared today on word o.j. prices soared today on word the food and drug administration is stepping up testing of orange juice imports. o.j. futures rose 11% to close at just over $2 a pound. the monitoring comes after a juice maker reported finding increased levels of fungicide in oranges from brazil. brazil is the world's largest orange producer.
>> susie: the n.f.l. playoffs continue this weekend. among the teams taking to the field? the world champion green bay packers. green bay is the league's smallest market, but the team has won 13 league championships. in tonight's "beyond the scoreboard," rick horrow talks with packers c.e.o. mark murphy.
he began by asking about the team's recent sale of shares to the public. it's really been humbling the response we've gotten from our fans. we sold 185,000 in the first two days. we're now over to,000 shares, and i'm really pleased with it and excited about it and really bodes well for the project that we're forward with to expand the stadium. we're excited about it. >> rick: what unique challenges do you have running a team in what is the nfl's smallest market. >> we don't have the resources of some of the other teams that have deep pocketed owners that they can turn to. so for us, the alternative to that is our shareholders and one of the things we've done over the years to offset that
advantage or compensate for the disadvantage is we have packer's reservation fund. that's now at 27.5 million and that really is kind of a rain e day fund. >> rick: it is a difficult economy, it is turning around a bit but a tough economy is even more difficult in a relatively small market. what is the packer's business model say about how to survive in a tough economy. >> first of all with our ownership structure, there are some benefits. i think one of the benefits is hat our fans have -- that our fans have a much stronger tie to the team because of the ownership interest that they have in the team. that help us in terms of particularly where we've been able to benefit from it is on our payroll sales. i think last year we led the nfl in terms of our pro shop sales. that's an area where we really put a lot of resources and folk and we -- focus and we think
that can benefit us. we're not monetizing it to a great degree now but the social media. we've done a number of different things to have greater connection between our fans and the organization. and i think that's over the long term is really going to benefit the packers. we're adding a lot of new share owners and we want them to continue to have connection to the packers and whether it be through facebook or getting them on to our website. >> rick: our guest market murphy ceo of the green bay packers. thank you very much. >> thank you, it's been a pleasure. >> susie: back now to our coverage of the markets. many investors searching for yield have been taking a fresh look at dividend-paying stocks. tonight's commentator, allan sloan, is among them. he's senior editor at large at "fortune" magazine. >> the hot investment idea for older people and retirees these days is dividend-paying stocks. at today's insanely low rates, you can't get meaningful income
from cds or money market funds or even five-year treasuries. so, a blue chip stock yielding 2% or 3% seems like nirvana. i've been buying dividend stocks for a while because, as you can see, i'm sort of old. not retired, though. but there's one thing i watch out for, and you should, too. risk. as a stockholder, you risk not only having the price of your shares fall, but also your income. if a company runs into trouble or decides to re-allocate capital, your dividend can be cut, or disappear, as holders of supposedly secure bank stocks discovered when the financial crisis hit. so if you go the dividend route, keep in mind that dividends aren't guaranteed. diversify among companies and industries. don't chase the highest yield. and remember that, regardless of interest rate levels, one rule never changes: there's no such thing as a free lunch. i'm allan sloan.
>> susie: that's "nightly business report" for tuesday, january 10. i'm susie gharib. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> tom: when we're not on the